Stagnant August restaurant sales dampen operator outlook

August was another lackluster month for restaurant industry same-store sales, as little changed in performance compared to July and quick-service restaurants continued to outperform full-service brands, according to the latest NRN-MillerPulse survey.

Restaurant industry same-store sales rose a modest 0.9 percent in August, up only slightly from the 0.8-percent increase in July, the survey found. The increase was driven by a 1.5-percent increase in sales at quick-service restaurants, which include both fast-food and fast-casual brands, but hindered by performance at full-service restaurants, which include both casual-dining and fine-dining brands.

More specifically, casual-dining restaurants continued to underperform quick-service restaurants for the 26th consecutive month, reporting a 0.4-percent decline in same-store sales in August — a slight improvement from the 0.6-percent decline in July. The performance gap can be attributed to value at quick-service brands, according to the operators surveyed in August.

“We asked operators for their thoughts on the reasons for this performance gap,” said Larry Miller, founder and chief executive of MillerPulse and a former Wall Street securities analyst. “In general terms, operators agree than an improved price-value offering is the centerpiece of the better relative trend for quick-service restaurants.”

Miller also noted, “Operators tend to have a more mixed view of whether this better price-value proposition is due to temporary factors such as less disposable income or more permanent structural factors such as better food quality, better atmosphere and no tipping.”

Operators also cited a faster, improved dining experience; consumers trading down to save money; and bigger marketing budgets for restaurant brands as reasons for quick-service restaurants outperforming those in the casual-dining segment.

MillerPulse, an exclusive partner with Nation’s Restaurant News, is a leading provider of industry performance data. The data and future business outlooks contained within are derived from its operator base that averages over $40 billion in restaurant industry sales and covers all regions of the country. The survey group represents operations within the quick-service, casual-dining, fine-dining and fast-casual segments. The 56 operations surveyed in August regarding July sales, profit trends, performance and outlook represent brands booking approximately $51 billion in industry sales.

Industry traffic also took a hit in August. Overall guest traffic fell 1.3 percent for the month compared with the 0.2-percent increase reported in July. Casual dining continued to struggle the most, with a 2.1-percent decline in traffic in August, but quick service also had a difficult month, reporting a 0.7-percent traffic decline overall and declines of 0.3 percent and 1.3 percent at fast-food and fast-casual brands, respectively.

A challenging end to the summer didn’t stop operators from believing that things would improve in September, with 38 percent of those surveyed saying that sales would get better in the month versus 13 percent of operators who said they would get weaker. The latter operators may be correct, as sales during the first week of September fell 0.5-percent, largely driven by a weak casual-dining performance.

Operators’ sales outlook for the next six months also worsened, according to the latest survey, a sentiment that was echoed by Miller.

“Another lackluster month causes our sales forecast for the industry for 2013 to be revised down modestly,” he said. “Our industry forecast for 2013 was lowered 40 basis points, to 1.3 percent, and assumes the remaining four months will be stronger as easier comparisons are lapped.”

Restaurant chains and operators looking to participate in the MillerPulse survey for additional results and insights can register at millerpulse.com.